When a casino gives player rewards or pays a restaurant bill, the tax treatment is not always as simple as “deduct 1% or 2%.” In the Philippines, the correct withholding depends on what is being paid, who receives the payment, and whether the payor is a withholding agent. A casino jackpot or similar player winning is usually subject to final withholding tax, while restaurant invoices paid by a casino, hotel, corporation, or other top withholding agent may be subject to expanded withholding tax or EWT. The difference matters because the wrong treatment can lead to BIR assessments, penalties, missing BIR Form 2307 certificates, and disputes between payor and payee.
What expanded withholding tax means in simple terms
Expanded withholding tax, also called EWT or creditable withholding tax, is an advance collection of income tax. The payor deducts a portion of the payment, remits it to the BIR, and gives the payee a BIR Form 2307 as proof. The payee then uses the withheld amount as a tax credit against its income tax.
For example, if a top withholding agent pays a VAT-registered restaurant ₱112,000 for dine-in meals, and the VAT-exclusive amount is ₱100,000, a 1% EWT means:
| Item | Amount |
|---|---|
| VAT-exclusive restaurant sale | ₱100,000 |
| 12% VAT | ₱12,000 |
| Total invoice | ₱112,000 |
| EWT at 1% of ₱100,000 | ₱1,000 |
| Cash paid to restaurant | ₱111,000 |
| BIR Form 2307 credit to restaurant | ₱1,000 |
The restaurant still reports the full sale. The ₱1,000 is not a discount. It is tax withheld and remitted to the BIR for the restaurant’s account.
The legal authority for creditable withholding tax is Section 57(B) of the National Internal Revenue Code, as amended by Republic Act No. 10963 or the TRAIN Law. It authorizes withholding on income payments to resident payees at rates prescribed by regulation, within the statutory limits. (Supreme Court E-Library)
EWT is different from final withholding tax on casino winnings
A common mistake is treating all casino-related payments as EWT. That is not correct.
Final withholding tax is different from EWT because it is generally the final tax on that specific income. The recipient does not normally credit it against regular income tax in the same way as EWT.
For casino player rewards, the first question is whether the payment is really a winning, jackpot, prize, or similar player reward from gambling activity. If yes, the BIR’s current position is that it falls under the rules on prizes and other winnings, not the 1% or 2% supplier EWT rule.
Under Revenue Memorandum Circular No. 57-2026, jackpot prizes or similar winnings derived by individuals, whether citizens or aliens, from casino gaming and other gambling activities are treated as “winnings” subject to final withholding tax. The circular also states that the tax base is the gross amount of the jackpot prize or winnings, without deduction for service charges, administrative fees, commissions, or similar charges.
Legal basis for tax on casino player rewards and winnings
Section 24(B)(1) of the Tax Code, as amended by RA 10963, imposes a 20% final tax on certain passive income of individuals, including prizes and other winnings derived from sources within the Philippines, subject to specific statutory exceptions. (Supreme Court E-Library)
For casino jackpot prizes and similar winnings, RMC No. 57-2026 clarifies the applicable withholding as follows:
| Recipient of casino jackpot or similar winning | Usual withholding treatment |
|---|---|
| Filipino citizen, resident alien, or individual covered by Section 24(B)(1) | 20% final withholding tax |
| Non-resident alien not engaged in trade or business in the Philippines | 25% final withholding tax |
| Payment to a supplier, contractor, restaurant, marketing agent, or other business payee | Analyze under EWT or other withholding rules, not automatically under casino winnings rules |
RMC No. 57-2026 also covers jackpot prizes or winnings from licensed gaming operators and, where applicable, unlicensed or unauthorized operators, consistent with the rule that income from any source is taxable, subject to enforceability and withholding requirements.
Practical example: foreign casino player wins a jackpot
A foreign tourist wins ₱2,000,000 from a casino jackpot in Manila.
If the player is treated as a non-resident alien not engaged in trade or business in the Philippines, the final withholding tax is generally:
| Item | Amount |
|---|---|
| Gross jackpot | ₱2,000,000 |
| Final withholding tax at 25% | ₱500,000 |
| Net payout | ₱1,500,000 |
If the player falls under the 20% category, the withholding would be ₱400,000 and the net payout would be ₱1,600,000.
The casino or gaming operator should document the player’s identity, tax status, gross winning, tax withheld, and payout record. In practice, foreign players are usually asked for passport or identification details because tax status affects the rate.
Are casino “player rewards” always taxable winnings?
Not always. The label used by the casino is not controlling. The BIR will usually look at the real nature of the payment.
1. Jackpot, progressive jackpot, slot machine win, table-game jackpot
These are the clearest cases. They are winnings. Apply the final withholding tax rules under the Tax Code and RMC No. 57-2026. The tax is computed on the gross amount, not the net amount after casino fees or other charges.
2. Loyalty points, rebates, cashback, free play, or promotional credits
These require closer review. A reward that is essentially connected to gambling participation may be treated as a gaming reward or prize, especially if it is convertible to cash, chips, credits, or valuable benefits.
Practical questions include:
- Can the player convert the reward into cash or chips?
- Is the reward earned because of bets placed or gaming volume?
- Is it a fixed marketing discount, a discretionary comp, or a prize?
- Is it given to an individual player or to a business intermediary?
- Is the casino bearing the tax or deducting it from the player?
The safer documentation approach is to classify the reward in writing: jackpot/winning, promotional prize, rebate, non-cash comp, discount, or supplier payment.
3. Hotel rooms, meals, transport, and other comps
Casino comps may be given as part of customer loyalty programs. If the comp is a meal, hotel stay, or transport benefit, the tax treatment depends on whether it is treated as a taxable prize or reward to the player, a marketing expense of the casino, or a bundled gaming-related benefit.
For high-value non-cash rewards, casinos usually need internal controls showing:
- fair market value of the reward;
- basis for giving the reward;
- player identity and residency status;
- whether tax was withheld or shouldered;
- related invoice or voucher;
- approval trail under casino policy.
4. Commissions, rebates, or incentives to junket operators and marketing agents
Payments to junket operators, independent marketing agents, affiliates, or other business intermediaries are not the same as player winnings. These are usually business income to the recipient and may be subject to EWT under the specific applicable category, such as commissions, service fees, or payments to local suppliers.
RR No. 11-2018 includes rules on commissions, rebates, discounts, and similar considerations paid to independent or exclusive sales representatives, marketing agents, and sub-agents in certain arrangements.
Restaurant invoices: when 1% or 2% EWT applies
Restaurant invoices are usually analyzed under the rules for payments by top withholding agents to local or resident suppliers.
Under RR No. 24-2025, which further amended RR No. 2-98 as amended, income payments made by top withholding agents to local or resident suppliers are generally subject to:
| Payment type | EWT rate |
|---|---|
| Supplier of goods | 1% |
| Supplier of services | 2% |
RR No. 24-2025 kept the 1% rate for suppliers of goods and 2% rate for suppliers of services, subject to special rules for certain wholesale goods such as motor vehicles, medicines, and fuels.
For restaurant transactions, the BIR has clarified through an FOI response that the nature of the transaction determines the rate:
| Restaurant transaction | BIR treatment in the FOI response |
|---|---|
| Take-out food | Purchase of goods, 1% CWT |
| Dine-in | Purchase of goods, 1% CWT |
| Food delivery | Purchase of goods, 1% CWT |
| Catering | Service activity, 2% CWT |
The same BIR response also notes the regular supplier and casual purchase rules under RR No. 2-98, as amended. (www.foi.gov.ph)
Who must withhold on restaurant invoices?
Not every customer who eats at a restaurant withholds tax.
A regular individual customer paying for lunch does not withhold EWT. A small business that is not required to withhold under the applicable rules may also have no EWT obligation for that ordinary restaurant purchase.
EWT usually becomes an issue when the payor is:
- a top withholding agent notified or classified by the BIR;
- a large taxpayer;
- a medium taxpayer or taxpayer under the Taxpayer Account Management Program;
- a government office or GOCC under separate government withholding rules;
- a casino, hotel, resort, or corporation that has been classified as a withholding agent.
RR No. 11-2018 provides that top withholding agents include taxpayers classified and duly notified by the Commissioner, including large taxpayers and other identified taxpayers, and that publication or posting of top withholding agents serves as notice. The withholding obligation begins on the first day of the month following publication.
Regular supplier vs casual restaurant purchase
A key practical issue is whether the restaurant is a regular supplier.
RR No. 11-2018 defines local resident suppliers of goods or services as suppliers from whom top withholding agents regularly make purchases. It also states that casual purchases from non-regular suppliers are generally not included, but a single purchase of ₱10,000 or more is subject to withholding.
In practical terms:
| Situation | EWT result |
|---|---|
| Casino regularly buys staff meals from the same restaurant | Usually withhold 1% if treated as food purchase |
| Casino books catering for an event from the same supplier | Usually withhold 2% as service |
| Corporation has one small meal receipt below ₱10,000 from a non-regular restaurant | Usually no 1% or 2% EWT under the casual purchase rule |
| Corporation has a single restaurant invoice of ₱10,000 or more from a non-regular supplier | Withholding may apply |
| Hotel pays restaurant concessionaire under a service or revenue-sharing contract | Review the contract; the rate may not be the simple 1% dine-in rule |
How to compute EWT on a restaurant invoice
For a VAT-registered restaurant, compute EWT on the VAT-exclusive amount. VAT is separately shown in a VAT invoice and is not the income component being subjected to income tax withholding.
The Ease of Paying Taxes Act, RA No. 11976, amended the VAT rules so that “gross sales” for VAT purposes exclude VAT, and VAT invoices must show the required information, including VAT details for VAT-registered taxpayers. (Lawphil)
Example 1: dine-in restaurant invoice from a VAT-registered restaurant
A casino classified as a top withholding agent pays a restaurant invoice for a VIP dinner:
| Item | Amount |
|---|---|
| VAT-exclusive food sale | ₱50,000 |
| 12% VAT | ₱6,000 |
| Total invoice | ₱56,000 |
| EWT rate | 1% |
| EWT | ₱500 |
| Net cash paid to restaurant | ₱55,500 |
The casino remits ₱500 to the BIR and issues BIR Form 2307 to the restaurant.
Example 2: catering invoice
A corporation pays a catering supplier:
| Item | Amount |
|---|---|
| VAT-exclusive catering service | ₱80,000 |
| 12% VAT | ₱9,600 |
| Total invoice | ₱89,600 |
| EWT rate | 2% |
| EWT | ₱1,600 |
| Net cash paid to caterer | ₱88,000 |
Because catering is treated as a service activity in the BIR FOI response, the 2% rate applies. (www.foi.gov.ph)
Invoicing rules after the Ease of Paying Taxes Act
After RA No. 11976 and the BIR’s EOPT regulations, the primary document for both goods and services is now the invoice, not the old distinction where official receipts were commonly used as the main document for services.
RMC No. 77-2024 states that a VAT-registered person must issue a duly registered VAT invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services, regardless of amount. Non-VAT sellers must issue a duly registered non-VAT invoice for transactions of ₱500 or more, and must issue one regardless of amount if the buyer requests it.
This matters for restaurants because a buyer claiming expense, input VAT, or EWT documentation should make sure the document is a valid invoice. RMC No. 77-2024 also states that an official receipt is treated as a supplementary document after the effectivity of RR No. 7-2024, unless properly converted under the transition rules.
For VAT input tax claims, RMC No. 77-2024 identifies critical information such as amount of sales, VAT amount, registered name and TIN of both buyer and seller, description of goods or nature of services, and date of transaction. Missing critical information can affect the buyer’s input VAT claim.
Step-by-step guide for casinos and businesses handling these payments
Step 1: Identify the recipient
Ask first: who is being paid?
- Individual casino player
- Foreign casino player
- Junket operator
- Marketing agent
- Restaurant
- Caterer
- Hotel or transport supplier
- Employee
The recipient affects the tax rule.
Step 2: Identify the nature of payment
Do not rely only on the label in the voucher. Determine if the payment is:
- jackpot or gambling winning;
- promotional prize;
- player comp;
- rebate or cashback;
- commission;
- food purchase;
- catering service;
- professional or contractor service.
Step 3: Apply the correct withholding category
Use this quick guide:
| Payment | Likely withholding treatment |
|---|---|
| Casino jackpot paid to individual | Final withholding tax, usually 20% or 25% depending on status |
| Progressive jackpot | Final withholding tax on gross amount |
| Dine-in, take-out, or food delivery invoice paid by top withholding agent | Usually 1% EWT |
| Catering invoice paid by top withholding agent | Usually 2% EWT |
| Commission to marketing agent | EWT under commission/service rules |
| Payment to employee | Withholding tax on compensation or fringe benefit rules, depending on facts |
Step 4: Compute the tax base correctly
For casino winnings, RMC No. 57-2026 says the base is the gross jackpot prize or winning, without deduction for service charges, administrative fees, commissions, or similar charges.
For restaurant invoices, use the VAT-exclusive amount shown in the invoice. If the invoice is VAT-inclusive and all items are subject to 12% VAT, divide the total by 1.12 to get the VAT-exclusive base.
Step 5: Withhold before payment
The withholding should be done at the time the income payment is made, accrued, or recorded according to the applicable withholding rules and accounting practice. Do not wait until year-end to “fix” withholding. Late withholding can lead to surcharge, interest, and compromise penalties.
Step 6: Remit and report to the BIR
RR No. 11-2018 requires withholding agents to file quarterly withholding tax returns and pay taxes withheld using BIR Form 1601-EQ for creditable withholding tax, accompanied by the Quarterly Alphabetical List of Payees. It also requires monthly remittance forms, BIR Form 0619E and/or 0619F, every 10th day of the following month for non-eFPS filers, and the 15th day for eFPS filers.
Step 7: Issue the correct certificate
For EWT, issue BIR Form 2307 to the payee within 20 days from the close of the quarter, or simultaneously with the income payment if requested. RR No. 11-2018 states that the withholding tax statement must show monthly income payments, quarterly total, and tax withheld.
For final withholding tax, the applicable certificate is generally BIR Form 2306.
Common mistakes that cause BIR problems
Mistake 1: Applying 1% or 2% EWT to casino jackpot winnings
Casino jackpots paid to individuals are not ordinary supplier payments. They are usually subject to final withholding tax on winnings.
Mistake 2: Treating all restaurant bills as 2% services
Dine-in, take-out, and food delivery may be treated as purchase of goods at 1%, while catering is treated as a service at 2%, based on the BIR’s FOI response. (www.foi.gov.ph)
Mistake 3: Withholding on the VAT-inclusive total
For restaurant invoices, withholding should generally be computed on the VAT-exclusive amount, not on the total amount including 12% VAT.
Mistake 4: Failing to issue BIR Form 2307
Payees need BIR Form 2307 to claim the withheld tax. If the payor withholds but does not issue the certificate, the payee may have difficulty claiming the credit.
Mistake 5: Ignoring the regular supplier rule
A top withholding agent must monitor whether a restaurant has become a regular supplier. The BIR FOI response refers to a supplier with at least six transactions, regardless of amount, in the previous or current year, and also notes that a single non-regular purchase of ₱10,000 or more may be subject to withholding. (www.foi.gov.ph)
Mistake 6: Assuming PAGCOR franchise tax removes all withholding obligations
PAGCOR and its licensees have special tax rules for gaming income. RMC No. 132-2024 clarifies that income from PAGCOR gaming operations of PAGCOR, its licensees, and contractees is subject to 5% franchise tax in lieu of other taxes, while non-gaming income is subject to regular corporate income tax, VAT, and other applicable taxes. That special treatment does not automatically erase withholding obligations on payments to players, suppliers, employees, agents, or restaurants.
Documents to keep
For casino player rewards and restaurant invoices, documentation is often the difference between a clean audit and a difficult one.
| Transaction | Documents to keep |
|---|---|
| Casino jackpot or winning | Player ID or passport, payout slip, jackpot report, tax computation, proof of final tax withheld, BIR remittance record |
| Non-cash player reward | Reward approval, fair market value support, player acknowledgment, tax treatment memo, withholding proof if applicable |
| Restaurant dine-in or delivery | Valid invoice, purchase request, payment voucher, EWT computation, BIR Form 2307 |
| Catering | Contract or event order, invoice, attendance or event support, 2% EWT computation, BIR Form 2307 |
| Junket or marketing commission | Contract, billing, proof of services, payee COR, sworn declaration if relevant, BIR Form 2307 |
| Foreign player payout | Passport, residency/status determination, payout record, final tax computation |
Frequently Asked Questions
Is expanded withholding tax the same as final withholding tax?
No. EWT is creditable against the payee’s income tax. Final withholding tax is generally the final tax on that income. Casino jackpots and similar winnings paid to individuals are usually subject to final withholding tax, not the 1% or 2% EWT supplier rule.
What withholding tax applies to casino jackpot winnings in the Philippines?
For individuals covered by Section 24(B)(1), the rate is generally 20% final withholding tax. For non-resident aliens not engaged in trade or business in the Philippines, RMC No. 57-2026 states that the rate is 25%.
Is casino withholding computed after deducting service charges or casino fees?
No. RMC No. 57-2026 states that the tax base is the gross amount of the jackpot prize or winnings, without deduction for service charges, administrative fees, commissions, or similar charges.
Are restaurant invoices subject to 1% or 2% EWT?
It depends on the transaction. Based on the BIR FOI response, take-out food, dine-in, and food deliveries are treated as purchases of goods subject to 1% CWT, while catering is treated as a service activity subject to 2% CWT. (www.foi.gov.ph)
Does an ordinary person need to withhold tax when paying a restaurant?
No. Ordinary consumers do not withhold EWT on restaurant meals. The issue usually applies to top withholding agents, corporations, casinos, hotels, government entities, and other payors required to withhold.
Should EWT on restaurant bills be computed including VAT?
Generally, no. For a VAT-registered restaurant, compute EWT on the VAT-exclusive amount. The invoice should separately show the VAT amount and other required invoice details under the EOPT invoicing rules. (Lawphil)
What form should the payor give the restaurant?
For EWT, the payor should issue BIR Form 2307, Certificate of Creditable Tax Withheld at Source. RR No. 11-2018 requires the certificate to be furnished within 20 days from the close of the quarter, or simultaneously with the income payment if requested.
What if the restaurant only issues an official receipt?
After the EOPT invoicing changes, the primary sales document is generally the invoice. RMC No. 77-2024 states that official receipts are treated as supplementary documents unless properly converted under the transition rules. For expense, VAT, and withholding documentation, the buyer should secure a valid invoice.
Are casino comps like free meals or hotel rooms taxable?
They can be, depending on the facts. A high-value comp may be treated as a reward, prize, marketing benefit, or part of the casino’s customer program. The casino should document the nature, value, recipient, and tax treatment of the comp.
Does the 5% PAGCOR franchise tax mean no withholding tax is needed?
No. The 5% franchise tax rule applies to specific gaming income of PAGCOR, its licensees, and contractees. It does not automatically remove withholding obligations on payments to players, restaurants, suppliers, agents, or employees.
Key Takeaways
- Casino jackpots and similar player winnings are generally subject to final withholding tax, not 1% or 2% EWT.
- RMC No. 57-2026 applies 20% final withholding tax to many individual casino winnings and 25% to non-resident aliens not engaged in trade or business in the Philippines.
- The tax base for casino jackpot winnings is the gross amount, without deduction for fees or charges.
- Restaurant dine-in, take-out, and delivery invoices are generally treated as goods at 1% EWT when paid by a top withholding agent.
- Catering is generally treated as a service at 2% EWT.
- EWT on restaurant invoices should generally be computed on the VAT-exclusive amount.
- BIR Form 2307 is essential for EWT, because it is the restaurant’s proof of creditable tax withheld.
- Valid invoices matter after the EOPT Act, because official receipts are no longer the main document for ordinary sales of goods and services.
- Do not assume all casino-related payments have the same tax treatment. Classify the payment first, then apply the correct withholding rule.